It is clear after the Supreme Court of Canada decision in Monk Corp. v. Island Fertilizers[10] that the Court has adopted a very broad and functional test of what constitutes a maritime obligation. In that case, a bulk fertilizer supply contract was at issue. Because the contract and the dispute addressed demurrage and supply of shore discharge cranes, the set of obligations was found by a majority of the court to be integrally connected to navigation and shipping. On this functionality test, it appears that any transaction involving any part of the life cycle of a ship, from its design through its operation to its scrapping and any transaction involving carriage by water may be governed by Canadian Maritime Law

It is also clear, after the Supreme Court of Canada decision in Ordon v. Grail[11] that the potential application of provincial law and statutes to marine transactions has been narrowed. The Court set out a mandatory four-part test.

1. First, it must be determined whether the subject of the dispute is so integrally connected to maritime matters as to be governed by Canadian Maritime Law.

2. If so, the second step is to determine whether Canadian Maritime Law provides a statutory counterpart to a provincial statute. If so, the federal statute applies.

3. The third step, if existing sources of Canadian maritime law do not contain a counterpart to the [provincial] provision sought to be relied upon, also takes place prior to engaging in constitutional analysis. A court must determine whether or not it is appropriate for Canadian non-statutory maritime law to be altered in accordance with the principles of judicial reform developed by this Court in Watkins v. Olafson, [1989] 2 S.C.R. 750, and R. v. Salituro, [1991] 3 S.C.R. 654, as well as in Bow Valley Husky, supra. and in the present case. The court should engage in this step of the analysis regardless of whether the possibility of judicial reform of existing maritime law is raised by the parties (at S.C.R. 493).

4. Finally, and only if the matter cannot be resolved through steps 1 through 3, should the tribunal decide if a provincial statute is constitutionally applicable to a maritime claim.

In argument before the Court, counsel for the intervenor Attorney General of Quebec, contended for the continued application of the aspect doctrine, in which different aspects of the same matter may be regarded as being governed by federal or provincial law, if federal law has not occupied the field. The Supreme Court did concede ".. we do not wish to be understood as stating that no provincial statute of general application will ever be applicable in any maritime context, whether involving maritime negligence law or not[12]" and suggested the example of provincial taxation laws. This indicates, for example, an arbitrator deciding a ship sale dispute could properly order payment of provincial sales taxes.

What is striking in the Supreme Court's reasoning, particularly for the common law lawyer accustomed to the exercise of restraint by courts of first instance in creating new law, is the mandate given by the Supreme Court that tribunals should develop non-statutory Canadian Maritime Law of their own motion. Therefore, even if the Supreme Court has conceded that the provinces may occupy some of the field, it is inviting maritime tribunals to dominate the water!

Has the Supreme Court foreseen or intended that arbitrators wield the same discretion? The more appropriate question is, does the UNCITRAL Model Law confer this jurisdiction? Article 28 directs the tribunal to apply the law and to take into account usages of the trade. If the application of Canadian Maritime Law is to be uniform between the courts and arbitral tribunals, I propose that arbitrators must be at least as proactive as courts in shaping non-statutory Canadian Maritime Law. A dichotomy between court administered and arbitrator administered Canadian Maritime Law would reflect poorly on both.

In the first half of the nineteenth century, European countries began clearing the deadwood of pre-industrial assumptions to create commercial codes and update mercantile law. The European reform process was reflected in Canadian colonial and provincial legislation and the Civil Code of 1866. A new spate of commercial law reform began in the 1960s with consumer protection and the pace of technology driven legal change now has no foreseeable end. With provincial commercial statutory law now having little, if any, applicability to Canadian maritime obligations, tribunals must guard against non-statutory Canadian Maritime Law defaulting to pre- 21st century principles.

The nineteenth and twentieth century statutory mercantile law reforms now are so ingrained into business assumptions that it is almost a shock that by constitutional evolution, obsolete non-statutory rules still need updating for Canadian Maritime Law. Almost the only nineteenth mercantile law reform reflected in a federal statute is the Bills of Lading Act.

This is not a historical curiosity but has dollars and cents consequences for today.

Here are some examples:

Cashflow is vital to shipping operations. Many charterers' lines of credit are secured by assignments of freight. Before statutory mercantile reforms, such assignments were unenforceable at law unless both assignor and assignee participated in the claim. Canadian Maritime Law has no equivalent to the British Columbia Law and Equity Act or the Ontario Conveyanvcing and Law of Property Act[13] that allow assignees to enforce rights in their own name if notice is given to the payor. An arbitration clause in a charterparty is little value if a necessary party is not in privity with the submission to arbitration.

Guarantees frequently are given in maritime commerce. Before statutory mercantile reforms, a guarantors' payment of the debt was regarded as a complete discharge, leaving the guarantor without a right to claim over against the original debtor or any co-surety. Many Canadian provinces enacted reforms similar to the English Mercantile Law Amendment Act,[14] which permitted guarantors called upon to pay to claim indemnity against co-contractors or co-guarantors. There is no federal equivalent. Why should tribunals continue to apply an obsolete common law rule?

Maritime commerce is replete with agents. At common law a judgment against or settlement with one of several persons having a joint obligation, such as a principal and its agent, discharged any right to claim against any of the other persons jointly liable. This doctrine of merger discourages settlements with one of several defendants and can leave a creditor without effective recovery if it obtains an award against a judgment proof joint defendant. While a covenant not to sue, as distinct from a release, may not trigger the merger trap, in the absence of an updated common law rule, claimants may still be faced with a lottery in choosing which joint defendant against whom to obtain an award. The doctrine of merger has been statutorily modified or abolished in many provinces[15]. It may still haunt non-statutory Canadian Maritime Law unless tribunals are prepared to update the law.

It was formerly thought that provincial sale of goods legislation applied to the sale of vessels[16], and by extension, to other goods in the marine stream of commerce, such as spares or victuals. This is doubtful after Ordon v. Grail. It will perplex, if not vex a contractual products liability claimant under an arbitration clause if it hears that it can no longer rely on the statutory warranties of fitness for purpose and its rights now will be governed by the rigours of the pre 1893 common law on sale of goods. There is no public policy reason why suppliers should be held to one legal standard in supplying goods for land based industries and a potentially lower standard in supplying ships or their appurtenances. If a ship breaks down, the consequences will be more severe than if the factory breaks down.

Where the statutes of the common law provinces and the Quebec Civil Code have similar provisions, it may be a relatively straightforward task to update non-statutory Canadian Maritime Law to reflect this provincial consensus. Thus, in Ordon Estate v. Grail the Supreme Court of Canada recognized a non-statutory maritime law right of survival of negligence actions after death, which all of the provinces' legislation had recognized.

This may assist maritime claims involving unincorporated businesses. Even before the general Trustee Act reform, the Mercantile Law Amendment Act restricted the common law rule that a cause of action dies with the person, by permitting contractual or partnership claims against the estates of deceased persons. By closely analogous reasoning, the third step rule in Ordon v. Grail should permit tribunals to update non- statutory Canadian Maritime Law to recognize and enforce claims against estates of deceased sole proprietors or partners.

However, the same degree of consensus does not always exist in provincial law. Take as an example the spouse of a recreational yacht buyer who co- signs a lending agreement with an arbitration clause. What will the tribunal choose as a model for development of non-statutory maritime law? The rigorous pre-1857 common law? The Alberta Guarantees Acknowledgement Act? The Ontario Mercantile Law Amendment Act? The Quebec Civil Code? The application of each may produce different results.

It is not a criticism of legislators that statutes may diverge, particularly in areas such as consumer protection. The differences reflect different and legitimate policy choices. But if there is no easily discernable statutory consensus on the solution to update an obsolete common law rule, then the tribunal's task in updating non-statutory Canadian Maritime Law is all the harder.

While the Canadian Maritime Law Association is working on identifying areas for statutory reform of general commercial aspects of Canadian Maritime Law, Parliament has not always acted quickly on shipping law reform.

It will be interesting to see if the marine arbitrator's elastic seaboot evolves into the sailboarders' small neoprene slipper or the fly-fisher's hip waders.

**FOOTNOTES**